Chapter 15 Leases

Chapter 15 focuses on accounting for leases from the perspective of both the lessor and the lessee. As discussed in Chapter 15, a lease can be classified as either an operating lease or a capital lease.

An operating lease is basic rental of property between two parties.

A capital lease, on the other hand is one where the substance is a transfer of property from the lessor to the lessee with the lessor receiving a long-term receivable for the lease payments, and the lessee receiving a leased asset and accompanying lease payable. The capital lease, with its many nuances is the main focus of Chapter 15. For a comprehensive guide to the many rules related to leases, go here.

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